Student loan debt is a significant financial burden for many people in Delaware and across the country, and the weight of this debt can prevent people from taking steps like buying a home. Around the United States, there are over 44 million people who owe a total of $1.5 trillion in student debt. Of those, around 2.2 million people have a balance of $100,000 or higher, and $31 billion in student loan debt is currently 90 days or more overdue. Borrowers aged 40 and younger are particularly likely to carry student debt as they owe $850 billion of the outstanding student loan burden.
While student loan debt can be a major burden on anyone’s balance sheet, it need not prevent people from taking the step of buying residential real estate. People can help bolster their chances of being approved for a mortgage despite their student loan debt by improving their FICO credit scores, for example. If people work to keep their credit scores at 750 or higher, they are considered to have excellent credit. This can play a major role in a successful mortgage approval.
On-time payments and debt reduction play a major role in a positive credit score, but it is also important to monitor credit reports for errors. Paying down existing debt, including student loan debt, can enhance a person’s ability to buy a home. Lenders evaluate borrowers’ debt-to-income ratio, so both earning more money and paying off more debt can improve a person’s viability as a mortgage borrower.
People who want to move toward homeownership can take many actions in order to improve their financial readiness to take the next step even while they have outstanding student loan debt. A real estate attorney can help people planning to buy residential real estate in any financial circumstances by reviewing contracts and preparing for a successful closing.